End This Corporate Welfare

WOODLAND, Calif. — AS someone who started a company that employs approximately 2,500 people in food processing and agribusiness, I used to wonder why so many Americans distrusted big business.

I now have a good answer. I have observed too many of my fellow business leaders blatantly work with the government to increase their profits at taxpayer expense. A prime example is the federally-run Export-Import Bank. Its charter expires at the end of June and businesses and lobbyists are lining up to persuade Congress to reauthorize it.

Ex-Im is a case study in corporate welfare. Founded during the New Deal, its mission is to “support jobs in the United States by facilitating the export of U.S. goods and services.” In practice, it offers taxpayer-backed loans, guarantees and insurance to private companies. When a company profits from the bank’s support, it pockets the money. If it defaults, taxpayers’ pockets get picked.

The bank’s supporters claim that it will put $14 billion back into the Treasury over the next decade, a number derived from federally mandated accounting methods. Yet this analysis fails to account for the market risk of the bank’s loans. The Congressional Budget Office, using the fair-value accounting method that is common in the private sector because it is considered more accurate, estimates that the Export-Import Bank will actually lose $2 billion over the next decade — a $200 million annual tab for taxpayers.

It’s private gain at the expense of public pain. Large companies in particular have taken a liking to it. In 2013, roughly 93 percent of the bank’s loan guarantees by value benefited only five companies — including Caterpillar, General Electric and other multinational corporations with hundreds of millions or even billions of dollars in annual profits — according to the Mercatus Center, a research center at George Mason University. In 2012, 83 percent benefited a single company: Boeing. Ex-Im also has a long history of assisting state-owned companies across the globe. It argues that a loan to, say, the airline Emirates will benefit the American economy because the airline buys Boeing’s planes — but the loan also gives the airline a competitive advantage over its American rivals and transfers wealth to foreign states’ coffers.

With the bank’s charter now set to expire — it has been periodically renewed by Congress, most recently in 2014 — these special interests are desperate to keep Ex-Im alive.

Last month, the Exporters for Ex-Im Coalition organized a lobbying day on Capitol Hill, sharing a handout that claims the bank supports jobs and small businesses, and provides a service that no private lender would.

But their claims must be dissected. Most important: The bank does not weigh the jobs it supports against those it destroys. By providing loans to foreign companies that compete with domestic ones, Ex-Im is actively eliminating American jobs. Nor are the bank’s claims about being “critical” to small businesses justified. Overall, fewer than 1 percent of America’s small businesses receive support from the bank, according to the Mercatus Center. The other 99 percent are at a competitive disadvantage with the Ex-Im elite. As for those select few, the bank’s data show that small businesses received only 19 percent of its total financing in 2013. And even this is misleading: Ex-Im defines small businesses as those having up to around $21 million in revenue or up to 1,500 employees — 1,450 more than the Affordable Care Act’s definition.

Bank proponents will of course point to the few companies that can’t obtain private financing as evidence of a supposed market failure. But the private market’s refusal to finance some companies is a measure of its competency in evaluating risk. Federal bureaucrats often lack the same expertise or make decisions based on other criteria — see the four Ex-Im employees who last year were suspended or removed “amid investigations into allegations of gifts and kickbacks,” according to The Wall Street Journal. Given this record, the private market’s caution is wise, not wicked.

Fortunately, not all business leaders are willing to participate in this farce. Freedom Partners Chamber of Commerce — a business league whose supporters include myself, Charles and David Koch and several hundred others — opposes both the Export-Import Bank and the innumerable other examples of corporate welfare in Washington.

More business leaders should follow suit. If they don’t, Americans’ perception that big business only serves its own interest will grow stronger, and free enterprise itself will become increasingly endangered.

Chris Rufer is the founder of The Morning Star Company.

A version of this article appears in print on , Section A, Page 21 of the New York edition with the headline: End This Corporate Welfare. Order Reprints | Today’s Paper | Subscribe